GNWT RESPONSE TO THE 2014 NWT ENERGY CHARRETTE REPORT. June 2015 Government of the Northwest Territories

Transcription

1 GNWT RESPONSE TO THE 2014 NWT ENERGY CHARRETTE REPORT June 2015 Government of the Northwest Territories

2 Front Cover: Taltson Twin Gorges (Source:NTPC)

3 Message from the Ministerial Energy Coordinating Committee On behalf of the Government of the Northwest Territories (GNWT) the Ministerial Energy Coordinating Committee is pleased to present the GNWT Response to the 2014 NWT Energy Charrette Report. In 2012 the GNWT held an Energy Charrette that resulted in the release of the GNWT Northwest Territories Energy Action Plan and the Northwest Territories Energy Corporation (NT Energy) A Vision for the NWT Power System Plan. Many communities and residents expressed appreciation for the 2012 Energy Charrette and the opportunity to discuss the energy issues and challenges facing our territory. In response to the concerns of residents over ever increasing electricity costs, as well as the GNWT s decision in 2014 to provide the NWT Power Corporation with a $20 million subsidy to cushion electricity rate increases due to extremely low water levels at the Snare hydroelectric system, the GNWT decided to hold a second Energy Charrette. The 2014 Energy Charrette was held in Yellowknife and Dettah on November 3-4, 2014 to involve communities, stakeholders and a range of energy experts in another discussion about the future of the NWT energy system. The results of the 2014 Charrette will help the GNWT re-focus its plans. The discussion focused on community-based solutions and visiting experts made the point that there was no silver bullet to the issues faced by the NWT. Several suggestions were provided, many of which are discussed in the following pages. As we enter the final year of the mandate for the 17th Legislative Assembly, it is clear that the GNWT cannot afford to do everything that was suggested. In addition to the costs associated with low water conditions there were $55 million spent as a result of a record forest fire season. CHARRETTE FINAL REPORT NOVEMBER 3 EXPLORER HOTEL, YELLOWKNIFE NOVEMBER 4 CHIEF DRYGEESE CENTRE, DETTAH Energy Solutions In the Northwest Territories GNWT Response to the 2014 nwt energy charrette report i

4 With this in mind the GNWT has committed to new initiatives in the short-term, largely from re-focusing existing resources, and identified several initiatives for the consideration of the 18th Legislative Assembly. An increased borrowing limit from the federal government will provide greater flexibility in the future to pursue many of these projects. The number one objective identified in the 2014 Energy Charrette was to reduce the cost of living. With this in mind the GNWT s short-term actions are focused on supporting residents to reduce their own energy use. We heard at the Charrette that energy conservation and efficiency is the best investment in the long term and that we need to work to transform our energy systems in the long term. This means reducing the use of imported diesel and greater use of local, renewable and alternative forms of energy. This response to the 2014 NWT Energy Charrette Final Report reflects changes to the third year of our 2013 Energy Action Plan and complements existing GNWT direction on energy and climate change issues addressed in the Northwest Territories Solar Energy Strategy and the NWT Biomass Energy Strategy. The GNWT recognizes that residents need to be directly involved in discussions regarding the opportunities and unique energy challenges faced in the NWT. This response will provide the basis for transition to the 18 th Legislative Assembly and we are confident that the next government will continue the discussion. Honourable Robert (Bob) McLeod Honourable Michael Miltenberger Honourable David Ramsay Honourable Tom Beaulieu ii GNWT Response to the 2014 nwt energy charrette report

5 Executive Summary Two recent developments involving the estimated capital cost of implementing the transmission expansion component of NWT Power System Plan and an extreme low-water situation on the Snare hydro-electric system prompted the Government of the Northwest Territories (GNWT) to re-consider what else could, or should, be done to make the NWT s energy systems more affordable and sustainable in the long-term. To gain public input on these matters the 2014 NWT Energy Charrette was held on November 3-4, 2014 in Yellowknife and Dettah. The results of the discussions were summarized in a 2014 Northwest Territories Charrette Final Report: Energy Solutions in the Northwest Territories. The Charrette Final Report contained suggestions on actions that could be taken in the shortterm (FY ) as well as long-term actions that could be considered by the 18 th Legislative Assembly. The GNWT also solicited additional stakeholder comments on the Charrette Final Report. In discussions at the Charrette, affordability was considered to be the most important objective. The other three objectives that ranked near the top of the list included environment, economy and energy security. Many Charrette participants recognized that the GNWT has made a number of investments in most areas raised, but that greater progress is required. In recent years, the GNWT has: Be more aggressive on energy efficiency and conservation; Plan for increased development of small-scale renewable energy projects as the technology improves and costs continue to come down; Continue to build on biomass initiatives; and Find ways to make use of the excess electrical energy at the Taltson Hydro Facility. Many Charrette participants recognized that the GNWT has been making a number of investments in most areas raised, but that greater progress is required. In recent years, the GNWT has: Substantially increased resources aimed at energy conservation and efficiency, including the establishment of regional offices for the Arctic Energy Alliance; The NWT continues to lead the country in the installation of commercial-sized wood pellet boilers and the GNWT is making efforts to expand the biomass supply chain throughout the Mackenzie Valley; The GNWT has invested substantially in solar, including the development of a cutting edge solar-diesel-hybrid system in Colville Lake. In total over the three year period between and the GNWT will have invested over $31M in energy initiatives under the 2013 Energy Action Plan. However, there are areas where progress is needed, including the establishment of an operating wind turbine in a NWT community, and finding an economical use for the surplus hydro power in the Taltson system. GNWT Response to the 2014 nwt energy charrette report iii

6 The GNWT has used the results of the 2014 Energy Charrette process to re-focus some shortterm actions and identify longer term, or transformative projects for the consideration of the 18 th Legislative Assembly. The NWT needs to continue to move away from diesel generation. The GNWT s short-term energy actions for include: Consolidation of government energy functions within the Department of Public Works and Services (PWS); Continuing to focus on energy conservation and efficiency, through:»» Release of a discussion paper on a potential NWT energy efficiency act in the fall of 2015;»» Placing greater focus on energy information and awareness, communications, marketing supports for businesses, and engagement with communities in future energy discussions;»» Improving the collection of fuel use data at the community level to support community energy planning;»» Consider changes to the Cities, Towns and Villages Act, allowing municipalities to use local improvement charges to provide loans to homeowners to make energy efficiency improvements; and»» Providing additional support for community government energy management. Supporting greater use of alternative and renewable energy through:»» Encouraging the use of renewable energy in industrial development;»» Expanding the biomass supply chain;»» Examining the regulatory issues associated with biomass and support for the NWT Biomass Energy Association;»» Examining the feasibility of a biomass combined heat and power pilot project;»» Establish a clear net metering policy to allow residents, businesses and community governments to feed renewable energy into local electricity grids;»» Building on the success of our solar energy initiatives; and»» Planning for the development of wind energy in the NWT. Undertaking a Yellowknife options analysis to find ways to improve the resiliency and reliability of the electricity system in the North Slave; and Assessing the options for using surplus capacity in the Taltson hydro system, including the potential to expand the use of electric heat and to support electric vehicles. iv GNWT Response to the 2014 nwt energy charrette report

7 Potential long-term transformative community energy projects include: Fort Simpson Liquid Natural Gas (LNG) project; Inuvik wind turbine project; Taltson transmission line extension to Fort Providence and Kakisa; Mini-hydro in Délîne; Snare transmission line extension to Whatì; and Mini-hydro in Łutselk e. There are also potential long-term transformative projects aimed at new energy markets. The current hydro systems in the NWT were built through partnerships with industry and, in part, through the vision and investment of the federal government decades ago. Expanding upon this infrastructure legacy would support our economy, provide opportunities for businesses and Aboriginal governments, and has the potential to lower rates for everyone through increased economies of scale. Community-based projects are the focus, but these opportunities will not be ignored: A 56 megawatt (MW) Taltson hydro expansion project; A 13 MW La Martre River hydro project; and A 20 MW LNG project in Yellowknife. One issue that is not discussed in detail in this response to the 2014 Energy Charrette Report is the structure of the electricity system. In 2010 the GNWT released Efficient, Affordable and Equitable: Creating a Brighter Future for the Northwest Territories Electricity System. The review was completed by an independent panel drawing upon extensive public consultation that reviewed electricity regulation, rates and subsidy programs to help define the vision for the future of electricity in the NWT. One of the key recommendations from the report was to consolidate elements of the electricity system. The GNWT responded by establishing rate zones, simplifying the system and substantially reducing rates in many communities. While many questions were raised at the Charrette regarding the potential to further consolidate the system, and whether there would be potential for rate reductions, this is a complex issue that the GNWT is currently working to address. The GNWT decided to release this response now to address many of the suggestions received through the Charrette process. Structural issues will be addressed at a later date. Reducing the high cost of living in the NWT, the need to move away from the use of imported diesel, and the expectation of northerners that we will continue to mitigate the impacts of climate change, are drivers that will shape the future approach to energy in the NWT. On April 14, 2015 Canada s Premiers met in Quebec and issued a Declaration on Climate Change. The GNWT was involved in developing this Declaration and supports the principles reflected in the Declaration. Continued engagement with communities and measuring and reporting on results will be key to achieving the energy future northerners envision. GNWT Response to the 2014 nwt energy charrette report v

8 Contents Message from the Ministerial Energy Coordinating Committee...i Executive Summary...iii INTRODUCTION... 5 Public Input... 6 GENERAL OBSERVATIONS FROM THE CHARRETTE REPORT... 7 SHORT-TERM ACTIONS OF THE GNWT... 8 Consolidation of Energy Functions within the Department of Public Works and Services...9 Continued Focus on Energy Conservation and Efficiency...10 Release of a Discussion Paper on a Potential NWT Energy Efficiency Act A Focus on Energy Information and Awareness Energy Data to Support Community Energy profiles Consider Changes to the Cities, Towns and Villages Act to allow Local Improvement Charges...12 Support for Community Government Energy Management...12 Continued Focus on Alternative and Renewable Energy...13 Encourage the Use of Renewable Energy in Industrial Development...13 Expanding the Biomass Supply Chain...14 Examine Regulatory Issues Associated with Biomass and Support for the NWT Biomass Energy Association...14 Feasibility of Biomass Combined Heat and Power Project...15 Net Metering Policy...16 Continued Focus on Solar...16 Feasibility of Wind Energy...17 Improving the Resiliency of the Electricity System in the North Slave Region...17 Feasibility of Utilizing the Surplus Capacity in the Taltson Hydro Grid...18 Transportation...19 vi GNWT Response to the 2014 nwt energy charrette report

9 LONG-TERM OPTIONS FOR THE CONSIDERATION OF THE 18 TH LEGISLATIVE ASSEMBLY...20 Transformational Community Energy Projects...20 LNG for Fort Simpson and other road connected communities..21 Inuvik Wind Project...22 Kakisa and Fort Providence Transmission Line (Taltson) Extension...22 Délîne Mini Hydro...22 Whatì Transmission Line (Snare) Extension...22 Łutselk e Mini Hydro...22 Transformative Projects for New Energy Markets MW Taltson Hydro Expansion Project MW La Martre River Hydro Project...23 Yellowknife LNG...23 Emerging Energy Alternatives...24 Intermittent Renewables (Solar) plus Energy Storage...24 Fort Simpson Biomass Combined Heat and Power...24 Improving the Resiliency of the North Slave Electricity System...24 North Slave - Wind Turbine...24 North Slave - Bluefish Hydro Expansion...25 POLICY APPROACH...26 Portfolio Approach...26 Evaluation and Reporting of Results...26 CONCLUSION...29 APPENDIX A: BACKGROUND INFORMATION ON ELECTRICTY AND HEAT IN THE NWT...31 Electricity...31 Heating...32 APPENDIX B: GNWT RESPONSE TO STAKEHOLDER INPUT...33 APPENDIX C: SUMMARY OF GNWT RESPONSES TO THE CHARRETTE REPORT...39 GNWT Response to the 2014 nwt energy charrette report vii

10 Transmission Line on the Snare Hydro System (Source: GNWT) viii GNWT Response to the 2014 nwt energy charrette report

11 INTRODUCTION The Government of the Northwest Territories (GNWT) held its first NWT Energy Charrette in November 2012 to gather input on the development of the Northwest Territories Energy Action Plan and A Vision for the NWT Power System Plan. Released in 2013, the Energy Action Plan is a detailed $31 million plan for GNWT investment in energy programs and projects through to the end of The Power System Plan presented a long-term vision for the development of the NWT electricity system, including the potential expansion of the NWT transmission grid. These plans support and complement GNWT direction on energy and climate change issues addressed in A Greenhouse Gas Strategy for the Northwest Territories, the Northwest Territories Solar Energy Strategy, and the NWT Biomass Energy Strategy. Since the release of the two plans, two key circumstances have changed. First, feasibility work on the transmission line expansion revealed it would cost well over $1 billion, which is beyond the financial capacity of the GNWT. Secondly, the costs to provide electricity have continued to escalate. For instance to avoid a potential 13% increase in electricity rates the GNWT took the extraordinary step of committing $20 million in funding to cover the cost of additional diesel generation in In light of these developments the GNWT organized its second NWT Energy Charrette, held November 3-4, 2014, to gather public and stakeholder input on how it could refocus the NWT Energy Action Plan in the short-term (i.e. FY2015/16), and make the NWT s energy systems more affordable and sustainable in the long-term. The Northwest Territories Energy Charrette Final Report: Energy Solutions in the Northwest Territories was released on December 22, During January and February 2015, the GNWT solicited public comments on the contents of the Charrette Final Report and on energy issues in general. In total seven written submissions were received. This document presents the GNWT s response to the suggestions contained in the Charrette Final Report as well as stakeholder input solicited by the GNWT on the Charrette Final Report. The document is structured as follows: GNWT observations on the Charrette Final Report. Short-term actions that the GNWT has or will initiate in that respond to the findings of the 2014 Charrette. Discussion of the long-term approach for the consideration of the 18 th Legislative Assembly. An overview of policy issues, including work related to performance measurement, reporting on results, and continued collaborative policy development. A conclusion and summary of the revised year-three actions from the NWT Energy Action Plan. GNWT Response to the 2014 nwt energy charrette report 5

12 Public Input Input from the public on energy issues in the NWT has been central to this Charrette process. Members of the public, as well as other stakeholders who attended, provided a diversity of meaningful perspectives and insights. Following the release of the 2014 Charrette Final Report in late December 2014, the GNWT solicited further public comments on the contents of the Charrette Final Report and on energy issues in general. Written submissions were received from seven organizations: City of Yellowknife; Joint letter from Yellowknife Condominium Corporations; Chamber of Mines; Norman Wells Chamber of Commerce; Ecology North; Northland Utilities; and The Pembina Institute. The GNWT would like to thank respondents for their time and effort in submitting comments and recommendations. The GNWT has considered this input in formulating this Response. A detailed compilation of the public input received and the GNWT s response to stakeholder submissions as well as all of the suggestions provided in the December 2014 Charrette Report can be found in Appendices B and C. Public input from participants at the 2014 NWT Energy Charrette (Source: Pat Kane) 6 GNWT Response to the 2014 nwt energy charrette report

13 GENERAL OBSERVATIONS FROM THE CHARRETTE REPORT The cost of energy and utility services in the NWT is very high compared to most other regions of Canada. The small scale of the communities, harsh environment and vast distances contribute to this high cost. Participants at the 2014 Energy Charrette acknowledged that there is no easy answer to the current energy challenges facing the NWT. It was noted that the NWT has a very complicated 68 megawatt system. Vast distances, many isolated community-based systems, and the need to invest in and maintain substantial redundancy make our relatively small system complex. There was an overall appreciation of the Charrette discussion and a focus on community projects. In discussions affordability was considered to be the most important objective. The other three objectives that ranked near the top of the list included environment, economy and energy security. Many of the ideas generated relate to actions currently underway or that have been previously considered. Other ideas that were discussed include: Diesel systems in our remote communities will remain a necessity until storage systems become more efficient in capacity and cost. Rising energy costs, environmental concerns and rapid changes in technology are challenging the status quo. These changes could exert pressure on the structure, ownership, and regulation of the NWT s electricity and heating markets. The GNWT energy policy framework needs to be designed to address these challenges and be aligned with clear objectives. The following recommendations were made to address these issues in the short-term: 1. Be more aggressive on energy efficiency and conservation 2. Find ways to make use of the excess electrical energy at the Taltson Hydro Facility 3. Continue to build on biomass energy initiatives in the short-term 4. Plan for increased development of small-scale renewable energy projects Some long-term energy supply suggestions were also proposed: Continue to consider small hydro and/ or transmission line build-out where feasible. Improve the utilization of waste heat recovery technologies in larger communities where there are economies of scale. Develop biomass combined heat and power (CHP) systems. Develop district energy systems using waste heat recovery and biomass CHP. Develop natural gas in the Beaufort Delta region and/or LNG where feasible. Focus on small scale solar and biomass projects for thermal communities. Examine potential for using waste to produce energy in larger communities where there are economies of scale. Develop new markets for Taltson hydro for heat and charging electric vehicles, for example. GNWT Response to the 2014 nwt energy charrette report 7

14 SHORT-TERM ACTIONS OF THE GNWT The Charrette Final Report provided a number of suggestions including areas to focus on as well as ideas for specific projects. At the start of the 2014 Energy Charrette the Premier and the Minister of Finance indicated that the third and last year ( ) of the NWT Energy Action Plan could be changed to incorporate ideas from the Charrette. In early February the Minister of Finance presented the GNWT s budget. Based on the economic outlook and the population growth forecasts the GNWT is projecting that its revenues will remain almost flat for the next five years while expenditure pressures continue to grow. To maintain fiscal responsibility in the transition to the 18 th Legislative Assembly, GNWT departments will be largely working within their existing resources for Based on the results in the report from the 2014 Energy Charrette, as well as comments received, the GNWT has been making investments in the right areas, but needs to make bigger investments and develop more projects. The short-term actions in the following sections represent the GNWT s immediate commitment to change. One key issue not addressed is the Structure of the Electricity Sector. This is a complex issue that the GNWT is currently working to address. The GNWT decided to release this response now to address many of the suggestions received through the Charrette process and will issue a position paper on structural issues by the fall of Honourable Michael Miltenberger speaking at the 2014 NWT Energy Charrette (Source: Pat Kane) 8 GNWT Response to the 2014 nwt energy charrette report

15 Following are the actions that will be undertaken in the short term, during the year. Consolidation of Energy Functions within the Department of Public Works and Services The responsibility for energy policy and planning, energy project development, conservation and efficiency, and alternative energy solutions has historically resided in a number of GNWT departments and agencies. In response to the desire for a greater focus on projects, effective April 1, 2015, the GNWT consolidated energy functions under the Department of Public Works and Services (PWS). This allows for more coordinated development of energy policy and a more focused approach to the development of energy programs and projects. Having energy policy and programs under a single Minister also enhances accountability to the Members of the Legislative Assembly. During the transition the Premier will continue to hold responsibility for new energy initiatives. This will ensure continuity for the life of the 17 th Legislative Assembly. It is important to note that energy issues are cross-cutting and that many departments will still play an important role with respect to energy in the NWT, including: The Department of Transportation will continue to focus on energy issues through their Green Light initiative and their Transportation Strategy; The NWT Housing Corporation will continue to implement energy efficiency and renewable energy into their public housing units; The Department of Environment and Natural Resources will continue with their focus on climate change and mitigating the impact of our energy use on the environment; and The Department of Industry, Tourism and Investment will continue to manage NWT oil and gas development and lead strategic energy issues at the national and international level. Input during the Charrette Discussion Group Sessions (Source: Pat Kane) GNWT Response to the 2014 nwt energy charrette report 9

16 Continued Focus on Energy Conservation and Efficiency At the 2014 Energy Charrette a number of presenters and participants suggested that the GNWT needs to invest more in energy efficiency and conservation measures with a focus on the thermal communities as a means of helping customers lower their energy usage and bills. The GNWT recognizes that energy conservation and efficiency is often the best investment that can be made to reduce energy bills and mitigate the impacts of our energy use on the environment. The 17 th Legislative Assembly has made substantial investments into energy efficiency, mainly through programs delivered by the Arctic Energy Alliance (AEA). This includes the establishment of AEA regional offices to better support communities. The GNWT has enhanced its culture of energy conservation in its operations and buildings. Through the Capital Asset Retrofit Fund, which allows for reinvestment of building energy savings, the GNWT is now saving an estimated $1.5 million in energy costs annually. As well, the current Energy Action Plan has provided $700,000 per year to invest in energy savings for public housing. The GNWT will continue to promote energy conservation and efficiency. In response to suggestions identified at the 2014 Energy Charrette, resources will also be directed towards the following priorities: Release of a discussion paper on an NWT energy efficiency act; Encourage the use of renewable energy in industrial development; A focus on energy information and awareness; Compilation of energy data to support community energy profiles; Arctic Energy Alliance The AEA was established in 1997 and has grown to a $3.2 million organization with offices in Inuvik, Norman Wells, Fort Simpson, Whatì, Hay River and Yellowknife. The GNWT funds nearly the entire AEA budget, allowing for a number of programs across the NWT, including the: Energy Efficiency Incentive Program provides incentives for residents to invest in energy efficient products; Commercial Energy Conservation and Efficiency Program aimed at helping businesses make energy conservation and efficiency investments; Alternative Energy Technology Program supports residents and communities in making investments into renewable energy sources such as solar; and Energy Guide for Houses which provides funding to assist homeowners and businesses to complete energy efficiency audits. See: Release of a discussion paper on changes to the Cities, Town and Villages Act and the use of local improvement charges to support residential energy efficiency improvements; and Support for community government energy management. One limitation experienced in the NWT is the collection of comprehensive and timely energy data, including energy trends, energy supply and demand details at various scales, costs and pricing, and information on such things as greenhouse gas emissions. This limitation has hampered efforts to develop reliable community energy profiles and community energy plans. 10 GNWT Response to the 2014 nwt energy charrette report

17 This issue of energy data availability is partially due to difficulties in obtaining fuel data from the numerous private fuel suppliers that operate in the NWT, as well as data management across numerous GNWT departments and agencies, which should improve significantly once the GNWT completes the consolidation of its energy functions under PWS. Release of a Discussion Paper on a Potential NWT Energy Efficiency Act In the current NWT Energy Action Plan, the GNWT indicated it would investigate the challenges and opportunities involved in developing and implementing an energy efficiency act in the NWT. The GNWT will develop a discussion paper that will investigate the case for an NWT energy efficiency act. The paper will investigate what other jurisdictions are doing in Canada and elsewhere, common practices for regulating energy efficiency, the potential scope and nature of an energy efficiency act, enforcement, and other issues to ensure an energy efficiency act is right for the NWT. The discussion paper will be released in the fall of A Focus on Energy Information and Awareness The GNWT has heard from many communities and residents that there was a sincere appreciation for holding the Energy Charrettes in 2012 and 2014, which allowed people the opportunity to learn more about their local energy systems and what opportunities there are for the future. Comments from the 2014 Energy Charrette demonstrate that the GNWT needs to make greater efforts to involve residents and communities in discussions regarding local energy systems. The more people are informed, the better understanding they have regarding the challenges of energy in the north as well as what they can do to reduce their use and manage their own costs. The Arctic Energy Alliance plays a key role in energy information and awareness. With the consolidation of energy functions within Public Works and Services, the new Energy section will work with the Alliance and build on these efforts. Increased promotional and information campaigns will enhance energy literacy in the NWT and provide communities and residents with the information they need to reduce their energy use. Improved access to energy efficiency marketing material directed towards NWT businesses will be another key objective. An ongoing communications strategy will be developed for the consideration of the 18 th Legislative Assembly that will answer two questions posed at the 2014 Charrette: What happens between Energy Charrettes? How are communities involved? Energy Data to Support Community Energy profiles There are currently gaps in community level energy data, including detailed energy demand and end-use statistics, costs and pricing, and greenhouse gas emissions. This energy data gap has been addressed for GNWT operations but not yet for communities. The key factor relates to difficulty in obtaining fuel data from the numerous private fuel suppliers that operate in the NWT. Without this data it is difficult to develop reliable community energy profiles and therefore community energy plans. Better data will lead to improved and better informed planning and project feasibility studies especially at the community level. It should be noted that in communities served by the Department of Public Works and Services detailed community data is already available. To ensure there is a community energy database for all communities the GNWT will be developing a system using the current fuel tax collection processes. The GNWT believes that local fuel providers will cooperate to support their communities in this initiative. GNWT Response to the 2014 nwt energy charrette report 11

18 Consider Changes to the Cities, Towns and Villages Act to allow Local Improvement Charges There was discussion at the 2014 Energy Charrette regarding the financing of energy efficiency improvements by residents. While energy efficiency improvements are often the best investment residents can make, not everyone is in a financial position to make the investment. One idea proposed is to revise the Cities, Towns and Villages Act (CTV Act) to enable tax-based communities to use a Local Improvement Charge (LIC) to help support homeowners, and potentially businesses, invest in energy efficiency improvements. This would allow a property owner to access low-cost long-term financing from the municipality and tie the repayments to the property through property liens and charges on the property tax bill. If a propertyowner sells their property in the future any remaining loan balance transfers with the property to the new owner. This concept is supported by the NWT Association of Communities (NWTAC), and the City of Yellowknife as well as the Pembina Institute. These groups have been working to define what an LIC energy efficiency program would look like. The City of Yellowknife released a report on the potential for this program in the spring of The GNWT participates on the Yellowknife Community Energy Planning committee and has been following this work closely. The Department of Municipal and Community Affairs is planning a review of the CTV Act during the 18 th Legislative Assembly. The GNWT will work with the NWTAC to develop a proposal for changes to the CTV Act that would allow for a LIC energy efficiency program, for the consideration of the 18 th Legislative Assembly. Support for Community Government Energy Management While the GNWT has invested substantially in making energy efficiency improvements for government buildings, there is substantial potential for energy efficiency upgrades in community government buildings. In 2014 the NWTAC retained the AEA to deliver energy audits of forty-six community government buildings in 8 communities NWT Energy Charrette (Source: Pat Kane) 12 GNWT Response to the 2014 nwt energy charrette report

19 AEA identified two hundred and forty actions the community governments could undertake that would pay for themselves in less than 5 years. Many of the recommendations made in the energy audits were similar across all communities and had a relatively low-cost with quick paybacks. A total investment of $1,000,000 spread over the 8 communities is estimated to save 130,000 liters of oil, 300,000 kilowatt hours (kwh) of energy and $400,000 a year. To overcome barriers to action such as lack of available contractors or capacity, AEA, with assistance from NWTAC, designed a project to help with the logistics and training involved in implementing a few of the recommendations in the audits. Communities cover the cost of the materials, labour, shipping and travel for the contractor(s), providing access to a vehicle for the contractor(s) during the installation, and provide a person to assist the contractor(s) during working hours when they are in town. Due to the success of this pilot project, and in recognition of the need to support community governments in maintaining and upgrading their assets, the GNWT has re-profiled internal funding in to ensure continued support to community governments for energy efficiency retrofits. Continued Focus on Alternative and Renewable Energy For many years the GNWT has recognized the need to reduce imported diesel with local, renewable and alternative energy sources. This has been achieved through biomass and solar projects, as well as incentive programs to support residents and businesses in making their own alternative energy investments. While there has been success, Charrette participants clearly signalled that they would like to see greater progress. Some immediate responses of the GNWT are discussed below and include further investment in biomass, solar, and work that will lead to the first community wind project in the NWT. In the long-term transformative projects are required and these are discussed in the next section. Encourage the Use of Renewable Energy in Industrial Development During the 2014 Energy Charrette renewable portfolio standards for industry were suggested. The GNWT will not impose rigid renewable energy targets on resource developments. As seen by the 9.2 megawatt wind farm at the Diavik Diamond Mine, enforced government standards are not required to encourage companies to invest in renewable energy as companies are already motivated by high cost of fuel. The GNWT currently uses the regulatory and environmental assessment process to ensure that companies consider the use of renewable energy. The GNWT agrees that renewable energy assessments should be included as part of the baseline studies done for environmental impact assessments to determine whether there is a payback period less than the overall project life. GNWT Response to the 2014 nwt energy charrette report 13

20 Sample of Wood Pellets (Source: GNWT) Expanding the Biomass Supply Chain It is estimated that $150 million is spent in the NWT every year to heat homes and buildings. Charrette participants noted that more needs to be done to increase the use of biomass for heat and electric heat from surplus hydropower in the South Slave region. Since 2006 the GNWT and private sector businesses have been working to increase the use of biomass heating predominately wood pellets to replace fuel-fired heating systems. These efforts have been very successful and have generated significant energy savings for many residential, commercial and institutional customers. The NWT is now recognized as a leader in Canada in the installation of commercialscale biomass heating systems. Increasing the availability of biomass energy in the NWT is a priority, as reflected in the NWT Biomass Energy Strategy. GNWT projects establish the demand for a community wood pellet supply, thereby enabling community access and supporting the expansion of a local biomass supply chain. In , three pellet boilers were installed and used at the Mackenzie Mountain School, at the airport terminal building, and at the airport maintenance garage in Norman Wells. A pellet boiler at the Deninu School in Fort Resolution is waiting to be started, and in pellet boilers will be installed at the schools in Tulita and Fort Good Hope. To date the GNWT has installed nineteen biomass boilers in communities throughout the North Slave, South Slave, and Deh Cho regions. Continuing this expansion throughout the Mackenzie Valley will help reduce the use of oil and save energy costs. The participants at the Charrette also noted that the NWT should be working to develop its own local biomass supplies, rather than importing wood pellets from British Columbia or Alberta. The GNWT will be supporting the wood pellet manufacturing industry in the NWT, primarily through an agreement to purchase madein-the-nwt wood pellets, once an NWT based project is operational. The GNWT has also supported the establishment of forest management agreements required to establish harvesting rights to the forest product required for a wood pellet operation. The GNWT will continue to look for ways to expand the biomass supply chain in the NWT. Examine Regulatory Issues Associated with Biomass and Support for the NWT Biomass Energy Association In 2014 the NWT Biomass Energy Association (BEA) prepared a discussion paper, entitled Barriers to Biomass Energy Installations in the NWT, to document its concerns regarding a perceived lack of understanding by regulatory and permitting agencies and a lack of technical guidelines specific to automatic feed pellet boiler systems. Other concerns raised included inconsistent treatment of pellet boiler systems by insurance companies and a need to monitor and control the quality of wood pellets being supplied to the NWT. The NWT BEA and PWS have had preliminary discussions about these issues and recognize that government and the private sector can work together to help address some of these barriers, including supporting the development and adoption of national standards for biomass fuel and heating equipment. 14 GNWT Response to the 2014 nwt energy charrette report

21 Through the Arctic Energy Alliance the GNWT will support the efforts of the NWT BEA including support for efforts at the national level to ensure national standards reflect the latest developments and technology in the biomass energy sector. Charrette participants also proposed that regulations related to access for fire-killed trees could be streamlined. Following the extensive forest fires experienced by the NWT in summer 2014 there are significant amounts of useable fire-killed trees that could be harvested as biomass fuel. The GNWT s wood harvest permitting process is found in the Forest Management Act and related regulations. This legislation does not discriminate between living and dead trees and the same permitting process must be followed for both in Recommendations on the need for streamlining the harvest permitting process arising from the 2014 Energy Charrette are welcome input. The Department of Environment and Natural Resources commissioned a report on the energy value of fire killed wood in the NWT with results expected in the spring of As well, the GNWT is actively surveying wood availability in the burned areas to allow for timely identification of the best areas to harvest useable forest fire residuals and will make this information available. This information will support timely access to firekilled trees. Feasibility of Biomass Combined Heat and Power Project Participants in the 2014 Energy Charrette had a strong interest in the potential for biomass combined heat and power (CHP) to potentially reduce the cost and emissions of energy in the NWT. The idea behind biomass CHP is to use wood biomass waste instead of fossil fuels to generate electricity as well as heat at the same time. The heat could be used for district heating. Given the strong interest and the success of the biomass heating programs initiated by the GNWT, research on CHP is being updated to consider the latest developments in the technology. Preliminary results of this work indicate that the cost of biomass is critical for an economic CHP plant and that a very large heat market is needed to support the business case and be cost competitive with diesel. With the potential establishment of a biomass supply chain inside the NWT projected biomass costs could be reduced to a point where projects become economic. Further work to define the biomass supply chain and access to the harvestable resource in the local area is needed to establish a business case. All of this work will be compiled for the consideration of the 18 th Legislative Assembly including information on a potential biomass CHP pilot project. Pellet silo at Elizabeth MacKenzie Elementary School in Behchoko, NT (Source: GNWT) GNWT Response to the 2014 nwt energy charrette report 15

22 Solar PV installation in Colville Lake, NT (Source: GNWT) Net Metering Policy In January 2014, the NWT Public Utilities Board (PUB) approved the implementation of a net metering program by electrical utilities in the NWT. The program allows residential or business electricity customers who install small renewable energy generators to feed into the electricity grid and accumulate energy credits monthly for any excess electricity they produce over what they use. These credits can then be used against future months when their usage exceeds their production. There are some aspects of the net metering program that some felt should be addressed to better encourage the installation of renewable energy technologies. A key issue was the need for long-term policy certainty to ensure that net meeting programs will not be cancelled in the future, which would impact the economics of investments. In response, on April 10, 2015, the GNWT issued rate policy guidelines that directed the PUB to: Allow municipal governments to be eligible for the program; Amend guidelines to establish some certainty with regard to how long the net metering program will be in existence; and Amend guidelines to limit the size of the installations to 15 kilowatts to ensure that the program is accessible to as many residents and businesses as possible. Continued Focus on Solar The 2012 NWT Solar Energy Strategy outlines steps and actions to help make solar energy an integral part of the NWT s energy mix. In recent years the decreasing cost of solar photovoltaic systems has resulted in an increase in the number of grid-connected systems being installed. A key pilot project scheduled for completion in by the Northwest Territories Power Corporation (NTPC) is a combined solardiesel-battery system in Colville Lake. This project will include 135 kilowatts of solar, and for the first time include battery storage to help maximize the renewable energy usage. The Alternative Energy Technologies Program administered by the Arctic Energy Alliance will continue to provide an avenue of support for residents and businesses to install their own solar energy. As well, PWS is initiating a smart metering project in Jean Marie River to ensure both customers and the utility have better real-time data on electricity demand, and to support the use of distributed renewable energy with a view towards developing a solar array for that community. The Northwest Territories Housing Corporation has been allocated $700,000 through the NWT Energy Action Plan for 2015/16 that is mostly being used to install solar PV on new and existing buildings. The GNWT developed the first large-scale solar array in Fort Simpson in Current work will be completed during and planning for new projects will continue and be presented to Members of the 18 th Legislative Assembly. 16 GNWT Response to the 2014 nwt energy charrette report

23 Feasibility of Wind Energy Wind energy is an active area of interest especially with successful projects such as the Diavik Diamond Mine wind turbine installation showing that there are now technologies that have proven track records in the North. Inuvik has some promising wind locations. Monitoring is complete at Storm Hills and was found to have an excellent wind regime. Wind monitoring will continue at an alternative location closer to Inuvik where preliminary monitoring has found good wind speeds. Feasibility work will be completed during for a wind project in Inuvik. Wind monitoring work will be undertaken in the Yellowknife/Snare region in to gather data and to examine cold weather inversion layers. Certain geographic features and taller turbine structures may be used to find higher wind speeds despite what is generally considered a poor wind regime. Preliminary work on wind in the Yellowknife region will be included in the Yellowknife options analysis discussed further below. Diavik Diamand Mine Wind Farm (Source: Diavik Diamonds Inc.) Snare River Hydro (Source: NTPC) Improving the Resiliency of the Electricity System in the North Slave Region Many charrette participants expressed concerns over the long-term reliability of power in the Snare hydro system. This issue was a point of discussion as all were aware of the occurrence of extreme low water conditions on the Snare River hydro system during Resiliency in the context of an electricity system is the ability to withstand stresses such as severe weather and supply failure, and results in increased reliability. Developing a large capital intensive project to add electrical generation capacity to address one low water year in a 12 year cycle is not likely cost effective and would increase electricity rates. In normal years the Snare system has enough hydro power to cover power requirements year-round, except for short peak periods during the coldest months in the winter. Looking ahead there is an issue with continued reliance on the existing diesel generators at the Jackfish station in Yellowknife. There are two 5 megawatt diesel generators that are 50 years old and are nearing the end of their life and options to replace these must be developed. Options should also consider the potential GNWT Response to the 2014 nwt energy charrette report 17

24 to expand the system if a new market or power load can be added to the system in the form of a resource development project. Existing hydro systems in the North and South Slave were developed through partnerships with industry, and the power loads of new industry would drive any material expansion of existing systems. With a new industrial load new systems could be developed with no impact on current rate payers and could potentially result in lower electricity rates through improved economies of scale. In the NWT Energy Action Plan reflected funding to undertake a feasibility study for the addition of capacity through liquefied natural gas (LNG). The GNWT will re-profile this funding to a Yellowknife options analysis to look at a range of potential power options. These options include an LNG generating station in Yellowknife, a capacity addition to the Bluefish hydro station, which is served from a different watershed than Snare, upgrades to the Jackfish diesel plant to increase capacity and improve efficiencies, a 10 MW battery system that could store 15 minutes of reserve energy (recharged by the hydro system), biomass CHP, and wind energy from the North Slave area outside of Yellowknife. The results of this work will be presented to the 18 th Legislative Assembly and an option will be chosen that improves reliability in the North Slave region while ensuring as minimal an impact on rates as possible. Feasibility of Utilizing the Surplus Capacity in the Taltson Hydro Grid The Taltson hydro generating station is located about 64 kilometers north of Fort Smith on the Taltson River. It has 18 MW of generating capacity and provides power to Fort Smith, Hay River, K atl odeeche First Nation, Fort Resolution and Enterprise via some 200 km of transmission lines. One of the short-term actions identified during the 2014 Energy Charrette was to find ways to use the approximately 50% excess yearly capacity available on the system. Ideas put forth included electric heating and charging of electric vehicles in the South Slave region. There was also a suggestion that the GNWT could issue a Request for Proposals (RFP) to see what ideas the private sector may have. In response, the NWT Power Corporation recently issued letters to government customers in Fort Smith and Fort Resolution to gauge their interest in electric heating. To support NTPC and respond to the 2014 Energy Charrette suggestion, the GNWT has provided funding to NTPC to complete studies on if transmission and distribution system upgrades would be needed to distribute additional power, as well as the upgrades and associated economics of retrofitting buildings to use electric heating. Once these studies are complete, the GNWT will have a much better understanding of the costs to provide customers in the South Slave with electric heating, the prospective electric heating price that would apply, and the simple payback that customers could expect. Depending on the study outcomes for electric heating in the South Slave these conversions could use all of the available surplus capacity on the Taltson system. However, if it turns out that some surplus remains, it is worth exploring the expanded use of electric vehicles, which could be charged in off-peak periods. The GNWT, working with NTPC, will develop a report on the economics of using the surplus power in the Taltson system for electric heating, and for electric vehicles, in the South Slave region, for release in the fall of GNWT Response to the 2014 nwt energy charrette report

25 2015 Chevy Volt (Source: Arctic Energy Alliance) Transportation Fossil fuel use for transportation purposes accounts for a significant amount of the NWT s annual fuel consumption and contributes about 30% to the NWT s annual greenhouse gas emissions. Within the context of finding ways to use the surplus electrical energy of the Taltson system, there is an interesting electric vehicle demonstration project now being conducted by the Arctic Energy Alliance. The AEA has leased a 2015 Chevy Volt, has installed a charging station at its Yellowknife office and has put about 2,000 km on the vehicle. A data logger is tracking the vehicle s performance and monthly reports are posted on the AEA web site ( nt.ca/research/electric-vehicle). A final case study will be completed after the 18-month lease has expired. Should the AEA electric vehicle demonstration project prove successful, there may be a business case for the expanded use of electric vehicles in the South Slave region where there is excess hydro capacity. GNWT Response to the 2014 nwt energy charrette report 19

26 LONG-TERM OPTIONS FOR THE CONSIDERATION OF THE 18 TH LEGISLATIVE ASSEMBLY Affordable, reliable and sustainable energy solutions are the focus of long-term planning and investment in the NWT s energy system. There are a number of proven technology options available today that can reduce our reliance on diesel. While the cost of some options are reducing (such as solar), most require substantial government subsidies to ensure that affordability is not impacted for residents and communities. The longterm goal is to develop transformative energy projects in NWT communities that will relegate diesel generation to back-up supply status. There are three kinds of energy projects that should be considered in planning for the future: Transformative Community Energy Projects: community scale projects that fall in the MW range that deliver clean sustainable energy to help displace diesel as the primary source of power. As heard at the Charrette, community-based projects will be the prime area of focus for the GNWT. Transformative Projects for New Markets: projects that are too large for all but the largest communities and fall in the MW range and generally require a new or emerging energy market, such as an industrial customer. These projects are approaching the scale required to build a solid business case for development. Emerging Energy Alternatives: A number of emerging technologies exist in other parts of the world that have yet to be proven in remote northern applications. These renewable energy technologies may evolve over time to become primary options for many of our remote communities. All of these options will be packaged for the consideration of the 18 th Legislative Assembly. In most cases further investments will be needed to reduce project risks and to refine the high level business case estimates that are provided below. Transformational Community Energy Projects Charrette participants were mainly focused on the community scale opportunities. A snapshot of transformative community energy projects with a ready market for power is provided below. These include a range of technologies such as wind, grid expansion, liquefied natural gas and mini hydro solutions. These projects have been studied to a variety of levels starting from the conceptual stage through to the tender ready stage where projects could proceed to environmental permitting and construction relatively quickly if funding was secured. Timelines for projects considered here are expected to range from 1-5 years to gather the information needed to secure permits and proceed to construction. Some regional and community projects have been studied to the feasibility or tender ready level, such as a transmission line extension of the Snare or Taltson transmission systems, and could proceed to construction relatively quickly. 20 GNWT Response to the 2014 nwt energy charrette report

27 Combined these projects would require a significant government subsidy in order to maintain existing electricity rates. Below is a table that ranks projects in terms of affordability and diesel displacement per government dollar invested. The amount of government contribution is defined by the level of funding required for a project to proceed with no increase to electricity rates. Divide the government contribution required by the lifetime amount of diesel displaced, to calculate the government subsidy for each litre of diesel displaced, presented below for comparability purposes. Community Project Project Population Cost Gov t Subsidy Lifetime **Diesel Gov t Cost to Displace Size Affected Estimate Required Displaced Diesel (MW) (millions) (millions) (millions) $/L Fort Simpson LNG* 1.2 1,250 $10-12 None 51 $0 Inuvik Wind 7.0 3,400 $25-30 $ $ Turbine Fort Taltson $30-40 $ $ Providence & Kakisa T-Line Extension Deline Mini-Hydro $30-40 $ $ Whatì Snare $30-40 $ $ T-Line Extension Łutselk e Mini Hydro $30-35 $ $ TOTAL * Liquefied Natural Gas ( LNG) is a fossil fuel that would displace diesel in favour of natural gas. LNG scores high on affordability but is non-renewable. **Assumptions: LNG, Wind - 25 year life; Transmission line extension, mini hydro 50 year life LNG for Fort Simpson and other road connected communities A preliminary investigation of potential LNG sites in the communities of Fort McPherson, Fort Simpson and Fort Liard indicated that Fort Simpson may provide the best business case for the next small scale LNG project. Work is underway to assess the technical feasibility of building a small scale LNG storage and gas generation plant at Fort Simpson which would rely on trucked LNG. Natural gas is a cleaner burning fossil fuel than diesel and the landed cost of natural gas is expected to provide a price advantage to diesel in the long-term. Tuktoyaktuk may also be a viable candidate for LNG once the highway is completed from Inuvik. LNG Storage Facilities in Inuvik (Source: GNWT) GNWT Response to the 2014 nwt energy charrette report 21

28 Inuvik Wind Project A wind monitoring station at Storm Hills near Inuvik confirmed that the location has excellent wind potential. A secondary wind site at The Inuvik High Point closer to the community is also being studied and shows promise. A business case considering site location and access will be developed that incorporates the costs and benefits for both options. A 7 MW wind farm could displace 59 million litres of diesel over a 25 year project life. Kakisa and Fort Providence Transmission Line (Taltson) Extension Extension of the Taltson transmission system from Hay River to Kakisa and Fort Providence is an opportunity to displace diesel generation and take advantage of surplus power that is available at the Taltson facility. This would convert two communities to clean hydro power from diesel forever. In 2013 the GNWT conducted a pre-feasibility study to develop cost estimates and details of the project. The project would be relatively easy to construct due to the existing highway which makes logistics and construction access much easier. Environmental impacts are expected to be less significant along the highway than for projects crossing an undisturbed area. The project would require a significant government subsidy to prevent rate increases but would displace 50 million litres of diesel over an assumed 50 year life. Délîne Mini Hydro The GNWT has supported the Délîne Land Corporation (DLC) to investigate the feasibility of building a 1.2 MW diversion type hydro project on the Great Bear River using very low head (VLH) technology. VLH technology is unproven in remote northern conditions, but if feasible could be an option for a number of other NWT communities. The GNWT is waiting for the results of the study and a third-party review of the technology and project design may be warranted. The project could displace 40 million litres of diesel over a 50 year life. Whatì Transmission Line (Snare) Extension The Snare system has surplus energy in normal water years that could easily meet Whatì s electricity needs. Constructing a 65 kilometre transmission line extension from the Snare system would displace diesel generation with clean hydro power and reduce the environmental impacts and greenhouse gas emissions. It is estimated that the project could displace 500,000 litres of diesel annually or 24 million litres over a 50 year life. The diesel plant would be maintained for back-up. The community of Whatì and the Tłîchô Investment Corporation (TIC) are strong supporters of the project. The proposed transmission line would pass the proposed 13 MW Lac La Martre Falls hydro site (discussed below) and would have capacity to transmit power from this plant, should the customer base emerge to warrant building it. Łutselk e Mini Hydro A small scale hydro diversion project could be located on the south side of the Snow Drift River approximately 14 km from the community. A short penstock and powerhouse would be constructed at the base of second rapids. The initial turbine size would be 500 kilowatts (kw), but the facility could include space to double capacity to 1 MW if needed. This is a proven technology that does not present any unknown operational risks. The project could displace 23 million litres over a 50 year life. Transformative Projects for New Energy Markets While community-based projects are the focus, preparing for potential opportunities is an area that can t be ignored. There are a number of transformative renewable power projects that could be built if a customer base emerges. Increasing the customer base improves upon economies of scale and has the potential to lower rates for everyone. 22 GNWT Response to the 2014 nwt energy charrette report

29 56 MW Taltson Hydro Expansion Project Exploring ways to develop Twin Gorges and eventually the Taltson River basin could provide economic development opportunities, and stabilize or reduce electricity rates for Aboriginal governments, communities and businesses in the South Slave region for generations to come. The Taltson Hydro Expansion remains the most advanced hydro opportunity in the NWT. The challenge is finding the power market or customer base to justify the significant investment needed to build and finance the expansion and associated transmission lines. This project would cost hundreds of millions of dollars to build. 13 MW La Martre River Hydro Project The GNWT worked with the Tłîchô Investment Corporation (TIC) to complete a feasibility study for the development of a hydro facility at the falls on the La Martre River. The study concluded that a 13.2 MW facility would generate enough revenue to support a $140 million investment. The snare system has surplus energy in normal water years and won t require additional power for at least 5 years, based on current growth projections. It is the best positioned hydro project in the North Slave to provide industrial scale power and is the next logical place for hydro power to be added to the existing snare system once needed. Yellowknife LNG New industrial loads in the vicinity of the snare system could be served by extending the existing 115 kilovolt (kv) transmission system out to resource development customers and utilizing the roughly 30 gigawatt hour (GWh) (3-4MW) of annual excess hydro (in normal water years) to supply them. Additional natural gas generation in the range of 20 MW would be needed to add a typical industrial customer and maintain sufficient redundancy on the snare system. LNG generation has proven to be a viable and cost effective alternative to diesel generation in Inuvik. LNG could be used to enhance redundancy in the snare system while optimizing the use of hydropower for new customers and avoiding diesel consumption in favour of cleaner burning natural gas. Preliminary costs are in the range of $50 Million. Additional costs for connecting new customers to the snare system via a transmission line spur would be borne by the end user. Natural gas is not renewable, but it is preferable over diesel and could help with affordability and energy flexibility in the interim. Construction of sub-station infrastructure by the Northwest Territories Power Corporation (Source: NTPC) GNWT Response to the 2014 nwt energy charrette report 23

30 Emerging Energy Alternatives A number of emerging technologies exist in other parts of the world that have yet to be proven in remote northern applications. These renewable energy technologies may evolve over time to become primary options for many of our remote communities but more study is needed to evaluate reliability, affordability, environmental benefit and cost. Intermittent Renewables (Solar) plus Energy Storage Colville Lake will become the first remote community in the NWT to have high penetration renewables, largely due to the battery system. The project will be operational in the coming year. The high penetration renewable demonstration project consists of integrating 135 kw of solar photovoltaic (PV) and 200 kwh batteries into a diesel generating power plant with an installed capacity of 350 kw. It is anticipated that during the summer months the solar PV system will be able to supply the entire town s load for most of the day. The project is an opportunity to build capacity in the operation and maintenance of a hybrid system and to evaluate the potential to replicate the project in other NWT communities. The cost of battery storage and expected shelf life continues to improve and could dramatically increase the business case for high penetration wind and solar integration in diesel communities. Fort Simpson Biomass Combined Heat and Power Preliminary results of the work indicate that the cost of harvested biomass is critical for an economic combined heat and power (CHP) plant and that a very large heat market is needed to support the business case. The heat market would require the development of a district heating system that is much larger than the system in place today in Fort Simpson in order to distribute the heat to large buildings in the area. Based on initial estimates, wood chips would need to be made available locally at or below $100 per bone dry tonne in order to be cost competitive with diesel. Improving the Resiliency of the North Slave Electricity System As mentioned in the short term actions section of the report, resiliency in the context of an electricity system is the ability to withstand stresses such as severe weather and supply failure, and results in increased reliability. Wind and our most viable hydro sites need to be part of the longer-term options that are considered. North Slave - Wind Turbine Two sites with good wind energy potential of 2-6 MW have been identified north of Yellowknife that could be tied into the Snare transmission system. The closest site is Berry Hill at roughly 15 kilometres north of Yellowknife and has good access. A 6 kilometre transmission line would be needed to tie into the existing Bluefish hydro line west of Prosperous Lake. The second site at CN Hill at roughly 140 kilometres northwest of Yellowknife near the Snare transmission line is expected to have a stronger wind regime but more challenging construction logistics. A distribution line of 4 kilometres would be needed to tie into the existing snare hydro line. A business case will be developed for both options along with two years of wind data and the benefits of integrating wind into the hydro system. 24 GNWT Response to the 2014 nwt energy charrette report

31 North Slave - Bluefish Hydro Expansion The Bluefish hydro site supplies electricity to the North Slave Snare transmission system. A new 7 MW turbine could be installed in place of an existing 3.5 MW unit to expand generation capacity. The expansion would help stabilize the electrical system and increase the Snare system redundancy by increasing the capacity within a separate watershed and separate transmission line. However the additional capacity is currently not needed in normal water years when the Snare system is fully operational. Bluefish represents the next logical place to source clean hydropower for a small load increase to the snare system. Bluefish Commissioning Spillway (Source: NTPC) GNWT Response to the 2014 nwt energy charrette report 25

32 POLICY APPROACH Many of the initiatives presented in this document will require policy and planning work. This includes work towards a potential energy efficiency act for the NWT, potential changes to the Cities, Towns and Villages Act, direction to the public Utilities Board, as well as the overall direction to be taken by the GNWT on energy policy. One major pending issue is the structure of the electricity sector in the NWT and the role of public and private ownership in the system. The GNWT will do the research and analysis on this issue and provide recommendations for consideration of the 18 th Legislative Assembly on options to proceed. Having an efficient, reliable, and affordable electricity system in the NWT is of critical importance in terms of the cost of living, economic development and environmental protection. Portfolio approach The GNWT will continue to actively engage the public and stakeholders on energy policy issues. Input from the public is invaluable when plotting future direction. We will work with the public, stakeholders, the Public Utilities Board, community and Aboriginal governments, industry as well as the NWT Power Corporation, amongst others, to ensure we get the policy right. Evaluation and Reporting of Results The GNWT will provide regular public updates on its progress in implementing the energy initiatives in this response to the 2014 Energy Charrette. During the 2014 Energy Charrette, participants were asked to consider several draft energy objectives and indicate which of the objectives they felt were most important. While there was a general sentiment that all of the objectives were important and should be reflected in the GNWT s energy planning and investment decision-making, most participants were willing to express a preference. Overall Affordability was generally considered the most important objective, with three other objectives Environment, Economy and Energy security ranked closely behind. 26 GNWT Response to the 2014 nwt energy charrette report

33 The GNWT agrees with the ranking suggested by the Charrette participants and strives to make energy investment decisions that satisfy as many of these objectives as possible. The GNWT also recognizes that to properly use these energy objectives in planning or evaluating future energy projects and initiatives, more work is needed to operationalize the objectives and ensure that existing energy programs, projects and policies are consistent with, and able to meet, these clearly stated objectives and priorities. Work was completed by the GNWT in 2014 to develop energy objectives that will be used for energy performance measurement, as detailed below. As noted there are presently gaps in the GNWT s ability to readily gather and analyze energy-related data and information. Once the consolidation of the energy functions within PWS is complete and a robust energy data collection system has been developed, it is expected that the GNWT will be in a much stronger position to track the performance of its energy investments and share this data with community governments. NORTHWEST TERRITORIES ENERGY ACTION PLAN A THREE-YEAR ACTION PLAN AND A LONG-TERM VISION December 2013 GNWT Response to the 2014 nwt energy charrette report 27